One of the hallmarks of HCV infection is impaired T cell function which contributes to viral persistence. Recent data found that exosomes released from infected hepatocytes contain positive and negative strand HCV RNA, and that serum exosomes transfer HCV RNA to CD4+ and CD8+ T cells. HCV RNA is found in T cells obtained from infected individuals, and we recently demonstrated that incubation of T cells with HCV RNA-containing serum, HCV RNA-containing exosomes derived from serum, or cell culture-derived infectious HCV particles inhibited TCR signaling. We found that the HCV genome was processed into a short RNA (vs-RNA) sequence with considerable complementarity to two sites on the 3'-untranslated region of a phosphatase known to acti- vate Src kinases (protein tyrosine phosphatase receptor epsilon or PTPRE). HCV vs-RNA reduced expression of PTPRE in T cells in vitro and in the peripheral blood mononuclear cells from HCV infected people in vivo. PTPRE levels were restored to following HCV cure by antiviral therapy. Mutation of HCV vs-RNA sequences predicted to form an RNA structure recognized by Dicer restored Lck phosphorylation following TCR stimula- tion, and changing the targeting sequence within the HCV vs-RNA to a different target (CXCR4) restored TCR signaling, PTPRE protein expression, and reduced surface expression of CXCR4. Together, these data sug- gest that HCV inhibits T cell function by exosome-mediated transfer of viral RNA that is processed into a vs- RNA resulting in reduced PTPRE expression and reduced TCR-mediated signaling. Based on these findings, we hypothesize that HCV vsRNA regulates PTPRE expression and that PTPRE regulates TCR signaling by recruiting regulators of LCK activity to the TCR complex. These studies identified a novel pathogenic mechanism for HCV and identified PTPRE as a key regulator of early TCR-mediated signaling. However, two major knowledge gaps remain. 1) what are the vs-RNA sequence requirements for HCV-mediated suppression of PTPRE in human T cells, and 2) how does PTPRE regulate human T cell function? We propose to address these knowledge gaps and hypotheses by 1) determining the HCV vs-RNA minimal sequence requirements for TCR-mediated signaling, 2) ascertaining the T cell factors required for the generation of HCV vs-RNA targeting PTPRE, 3) investigating the molecular mechanism for the role of PTPRE in human T cells. Completion of these studies will provide novel insights into the function of HCV vs-RNA in the regulation of T cell function and in- crease understanding of HCV pathogenesis. These studies will also examine the role of PTPRE in normal T cell function. Since the role of PTPRE in controlling human T cell function is completely unexplored; this appli- cation will address this knowledge gap. The completion of this application will also provide mechanistic insight into the regulation of early T cell signaling by PTPRE, providing a potential new target for the modulation of T cell function. The complementary experience of the Stapleton and Houtman laboratories make these studies highly feasible.